Item
1.01. Entry into a Material Definitive Agreement.
First
Forbearance and Amendment Agreement
As
disclosed in a Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on December
30, 2015, by InterCloud Systems, Inc., a Delaware corporation (the “Company,” “we,” “us,”
or “our”), we previously entered into a Securities Purchase Agreement, effective as of December 29, 2015, with the
investor party thereto (the “Holder”), pursuant to which we issued to the Holder a 10% senior secured convertible
debenture (as subsequently amended and restated, the “Original Debenture”), dated December 29, 2015.
On
May 17, 2016, we entered into a Forbearance and Amendment Agreement with the Holder (the “Debenture Forbearance Agreement”),
pursuant to which, among other things, the Holder agreed to forbear action with respect to certain Existing Defaults (as defined
in the Debenture Forbearance Agreement) in accordance with the terms of the Debenture Forbearance Agreement (the “Debenture
Workout”). The defaults, which were not monetary in nature, related, inter alia, to our failure to timely file our Annual
Report on Form 10-K for the fiscal year ended December 31, 2015.
Amended
and Restated Senior Secured Convertible Debenture
In
connection with the execution of the Debenture Forbearance Agreement and the consummation of the Debenture Workout, we executed
and issued a second amended and restated senior secured convertible debenture (the “Amended and Restated Debenture”),
in order to, among other things, amend the Original Debenture by: (i) reducing the conversion price at which the Amended and Restated
Debenture converts into our common stock, par value $0.0001 per share (“Common Stock”), and fixing it at $0.80 per
share of Common Stock, subject to equitable adjustments as set forth in the Amended and Restated Debenture; and (ii) eliminating
provisions that provided for (A) the issuance of common stock at a discount to the market price of the common stock and (B) anti-dilution
protection with respect to the Holder’s conversion rights under the Original Debenture.
The
Amended and Restated Debenture was issued in the aggregate principal amount of $7,500,000, has a maturity date of May 31, 2019,
bears interest at 0.67% per annum, and is convertible into Common Stock at a fixed conversion price equal to $0.80 per share,
subject to equitable adjustments as set forth in the Amended and Restated Debenture. The Company shall pay interest to the Holder
on the aggregate unconverted and then outstanding principal amount of the Amended and Restated Debenture, payable monthly in arrears
as of the last Trading Day (as defined in the Amended and Restated Debenture) of each calendar month and on May 31, 2019, in cash.
In addition, the Company shall pay to the Holder an additional amount equal to 7.5% of the outstanding principal amount on the
Amended and Restated Debenture on each of May 31, 2017, May 31, 2018 and May 31, 2019, subject to certain exceptions set forth
in the Amended and Restated Debenture. Commencing on May 17, 2016, the Holder shall have the right, at its option, to require
the Company to redeem up to $169,445 of the outstanding principal amount of the Amended and Restated Debenture plus the then accrued
and unpaid interest thereon per calendar month in cash. The Amended and Restated Debenture contains standard events of default.
Senior
Secured Note
In
connection with the execution of the Debenture Forbearance Agreement and the consummation of the Debenture Workout, we executed
and issued a 0.67% senior secured note (the “2.7 Note”), dated May 17, 2016, in the aggregate principal amount of
$2,745,000 to the Holder. The 2.7 Note has a maturity date of May 31, 2019, bears interest at 0.67% per annum, and contains standard
events of default.
Second
Forbearance and Amendment Agreement
Amended
and Restated Senior Secured Convertible Note
As
we disclosed in a Current Report on Form 8-K filed with the SEC on February 19, 2016, we previously entered into a Securities
Exchange Agreement, effective as of February 17, 2016, with VaultLogix, LLC, a Delaware limited liability company (“VaultLogix”)
and the lender thereto (the “Holder Affiliate”), pursuant to which we and VaultLogix issued to the Holder Affiliate
an 8.25% senior secured convertible note (the “Original Note”), dated February 18, 2016.
On
May 17, 2016, we entered into a Forbearance and Amendment Agreement with VaultLogix and the Holder Affiliate (the “Note
Forbearance Agreement”), pursuant to which, among other things, the Holder Affiliate agreed to forbear action with respect
to certain Existing Defaults (as defined in the Note Forbearance Agreement) in accordance with the terms of the Note Forbearance
Agreement (the “Note Workout”). The defaults, which were not monetary in nature, related, inter alia, to our failure
to timely file our Annual Report on Form 10-K for the fiscal year ended December 31, 2015.
Amended
and Restated Senior Secured Convertible Note
In
connection with the execution of the Note Forbearance Agreement and the consummation of the Note Workout, we executed and issued
an amended and restated senior secured convertible note (the “Amended and Restated Note”), in order to, among other
things, amend the Original Note by: (i) reducing the conversion price at which the Amended and Restated Note converts into Common
Stock and fixing it at $0.80 per share of Common Stock, subject to equitable adjustments as set forth in the Amended and Restated
Debenture; and (ii) eliminating provisions that provided for (A) the issuance of common stock at a discount to the market price
of the common stock and (B) anti-dilution protection with respect to the Holder Affiliate’s conversion rights under the
Original Note.
The
Amended and Restated Note was issued in the aggregate principal amount of $11,601,054.62, has a maturity date of May 31, 2019,
bears interest at 0.67% per annum, and is convertible into Common Stock at a fixed conversion price equal to $0.80 per share,
subject to equitable adjustments as set forth in the Amended and Restated Note. The Company and VaultLogix shall pay interest
to the Holder Affiliate on the aggregate unconverted and then outstanding principal amount of the Amended and Restated Note, payable
monthly in arrears as of the last Trading Day (as defined in the Amended and Restated Note) of each calendar month and on May
31, 2019, in cash. In addition, the Company shall pay to the Holder Affiliate an additional amount equal to 7.5% of the outstanding
principal amount on the Amended and Restated Note on each of May 31, 2017, May 31, 2018 and May 31, 2019, subject to certain exceptions
set forth in the Amended and Restated Note. Commencing on May 17, 2016, the Holder Affiliate shall have the right, at its option,
to require the Company to redeem up to $322,252 of the outstanding principal amount of the Amended and Restated Note plus the
then accrued and unpaid interest thereon per calendar month in cash. The Amended and Restated Note contains standard events of
default.
Senior
Secured Note
In
connection with the execution of the Note Forbearance Agreement and the consummation of the Note Workout, we executed and issued
a 0.67% senior secured note (the “5.2 Note”), dated May 17, 2016, in the aggregate principal amount of $5,220,475
to the Holder Affiliate. The 5.2 Note has a maturity date of May 31, 2019, bears interest at 0.67% per annum, and contains standard
events of default.
Amendment
Agreement
On
May 23, 2016 we entered into an Amendment Agreement with the Holder, the Holder Affiliate, VaultLogix, and the Guarantors thereto
(the “Amendment Agreement”), pursuant to which, among other things, we requested that (i) the Holder cause $172,000
to be withdrawn from the Blocked Account (as defined in the Original Debenture) and made available to the us, and (ii) the Holder
Affiliate cause $328,000 to be withdrawn from the Deposit Account (as defined in the Original Note) and made available to VaultLogix
and us, and in exchange for the foregoing (i) VaultLogix will guaranty the obligations of, and provide security for, the Amended
and Restated Debenture and the 2.7 Note, (ii) the Guarantors (as defined in the Amendment Agreement) will guaranty all indebtedness
due to the Holder Affiliate under the Amended and Restated Note and 5.2 Note, and (iii) we and each Guarantor (as defined in the
Amendment Agreement) will provide security for all obligations owed to the Holder Affiliate under the Amended and Restated Note
and the 5.2 Note
in accordance with the terms of an Additional Debtor Joinder, dated May 23, 2016 (the “Joinder”),
pursuant to which we and each additional party thereto agrees to be bound by the terms of that certain Security Agreement, dated
as of February 18, 2016, made by VaultLogix in favor of the secured party thereto (the “February Security Agreement”).
The
foregoing description of the Debenture Forbearance Agreement, the Note Forbearance Agreement, the Amended and
Restated Debenture, the Amended and Restated Note, the 2.7 Note, the 5.2 Note, the Amendment
Agreement, the Joinder,
and the February Security Agreement does not purport to be complete and is subject to, and qualified in its entirety by
reference to, the full text of the Debenture Forbearance Agreement, the Note Forbearance Agreement, the Amended and Restated
Debenture, the Amended and Restated Note, the 2.7 Note, the 5.2 Note, the Amendment Agreement, the Joinder, and the February
Security Agreement, copies of which are filed herewith as Exhibits 10.1, 10.2, and 10.3, 10.4, 10.5, 10.6, 10.7, 10.8 and
10.9 respectively, and are incorporated by reference herein. The provisions of the Debenture Forbearance Agreement, the Note
Forbearance Agreement, the Amended and Restated Debenture, the Amended and Restated Note, the 2.7 Note, the 5.2 Note, the
Amendment Agreement, the Joinder, and the February Security Agreement, including the representations and warranties contained
therein, are not for the benefit of any party other than the parties to such agreements and are not intended as documents for
investors and the public to obtain factual information about our current state of affairs. Rather, investors and the public
should look to other disclosures contained in our filings with the SEC.